On Monday, Alliance Boots announced a joint venture with Beijing Med-Pharm to acquire a 50 percent stake in Guangzhou Pharmaceuticals Corp., the third-largest pharmaceutical wholesaler in China.
- UK Story: Alliance Boots in link-up with Chinese pharmacy wholesaler
- US Story: Beijing Med-Pharm to get stake in Chinese drug wholesaler
The reality of global drug distribution is getting closer, but the big US wholesalers – AmerisourceBergen Corp (NYSE:ABC), Cardinal Health Inc (NYSE:CAH), and McKesson Corp (NYSE:MCK) – remain on the sidelines. How much longer can they afford to wait?
China is under its new reform of medical system. To seperate the medicine system and the hospital system is one of the targets of the reform, for Chinese hospitals have been blamed for making economic interest by monopolizing the supply of the medicine to patients.ReplyDelete
The reform is believed to be creating a great opportunity to those medical distribution companies which have suffered an extremely low margin during the past years under the current medical system. After the seperation of the hospital and the medicine like many developed countries, they will have more power in the medical market.
Since the concentration of the market in China is still very low compared with USA, Europe as well as Japan, many Chinese medical distribution companies are making their strategy to accelerate expanding the business by M&A or collaborating with foreign companies. So this news of the collaboration between Alliance Boots and Guangzhou indicates that motivation clearly.
But the reform is still at its starting point. How will the companies benefit from it and what the European and USA giant companies will do in this market is surely very important for all the players there.